Dutch gov't starts 2023 with positive balance sheet; First quarter better than expected

The difference between the Dutch government’s revenue and expenditure was positive in the first quarter of this year. As in 2022, the government started the year with a surplus. Additionally, although the Dutch economy shrank by 0.3 percent on a quarterly basis, revised figures were rosier than previous estimates, according to Statistics Netherlands (CBS).

The national statistics bureau said the government surplus reached 6 billion euros during the first quarter of the year. Partly due to the positive balance, government debt also decreased in the first quarter of 2023 by more than 6 billion euros to 474 billion euros, or 48.3 percent of gross domestic product (GDP).

There was a deficit on an annual basis, measured from the second quarter of 2022 through the first quarter of 2023. Expressed as a percentage of GDP, the deficit amounted to 0.1 percent. In the Spring Memorandum, an annual update on the budget, the Cabinet predicted a deficit of 2.6 percent of GDP for the whole of 2023.

Government revenue amounted to 110 billion euros in the first quarter. That is an increase of 8.6 billion euros compared to last year. Half of the increase can be explained by rising tax revenues, of which almost 2 billion euros can be attributed to VAT and more than 1 billion euros to wage and income taxes. Natural gas revenues also rose by more than 2 billion euros.

Government expenditures rose in the first quarter by 8.3 billion euros to 104 billion euros. This was mainly because social benefits were more than 4 billion euros higher and government wage costs increased by 1 billion euros.

Expenditure on subsidies increased by 1 billion euros on balance. The energy price cap came into force in 2023, and an initial estimate noted that 3 billion euros in subsidies have been granted. At the same time, expenditure on other subsidy schemes fell by 2 billion euros compared to a year earlier. For example, in the first quarter of 2022, entrepreneurs were still able to receive compensation from support schemes set up to soften the blow of the coronavirus pandemic.

Separately, the CBS said the Dutch economy shrank by 0.3 percent from the end of the last quarter of 2022 to the end of the first quarter of 2023. That figure was revised upwards from an initial calculation in May that put the economic contraction at 0.7 percent.

The upward adjustment is mainly due to the trade balance and investments, the CBS said. For example, exports of goods fell less sharply, and exports of services rose more sharply. Imports of goods and services have also been revised upwards, but less strongly than exports.

The adjustment can also be attributed to new, more complete data for the first quarter of 2023 and to the availability of new annual figures for 2021 and 2022, and the reconciliation of the quarterly estimates to those new annual figures. This happens every year in June.

Based on newly available information, the growth of the economy in 2022 has been adjusted from 4.5 percent to 4.3 percent. Economic growth in 2021 is set at 6.2 percent, which was 4.9 percent in the previous calculation.

Compared to a year earlier, the economy grew by 1.9 percent in the first quarter, left unchanged compared to the initial calculation. Growth in the first quarter of 2023 was largely driven by investment, household consumption and government consumption.

According to the second calculation, the number of jobs held by employees and the self-employed grew by 49,000 in the first quarter compared to the fourth quarter of 2022. The first calculation showed an increase of 63,000 jobs.

There were 270,000 more employees and self-employed people in work during the first quarter of 2023 when compared to a year earlier. That was revised down slightly from the initial estimate of 278,000.